| Modern management pattern of two rights separation of ownership and management rights inevitably leads to the principal-agent problems. The goals of the owner and operator are not completely equal, so in the process of actual operation, in order to achieve their own interests, the operators may damage the interests of the shareholders on a certain extent. How to solve the principal-agent problems caused by the corporate governance issues has been keen on discuss the topic in the theory and practice, also is a problem which the long-term failed to get good solve.The emergence of institutional investors bring us new hopes to solve the principal-agent problems. Compared with individual investors, institutional investors as a relatively independent shareholders, has the advantages of the capital, information and professional ability, can more effectively participate in corporate governance, improve corporate performance.In the past30years, the world’s major institutional investors of capital market obtained the swift and violent development, British and American developed countries, in particular, institutional investors have become the dominant force in the capital markets, and relevant scholars also do a lot of research about institutional shareholdings get involved in the governance of listed companies. The research which about this important corporate governance mechanism of our country is still at the primary stage and lack of system and the special study, with the growing of China’s institutional investors, the study of the field should be strengthened. Most of Chinese listed companies are state-owned enterprises restructuring, the corporate governance has serious flaws and their own particularity, how to use this emerging power of institutional investors and the reasonable profit from the overseas success experience to make a certain contribution to improve the level of corporate governance of listed company is very meaningful. The focus of this research is to analysis the effect of institutional holdings influence on the compensation performance sensitivity, to achieve this goal, this paper design the research idea is as follow:The first is introduction to selected topic background and significance, foreign institutional investors play a positive role in corporate governance and provide the reference to improve the governance of listed companies in China. The second is to review and summarize reviewing related literature at home and abroad. At present, foreign researchers have come to a lot of influential conclusions about institutional investors influence on compensation performance sensitivity, but our study is still in the initial stage of exploration in this respect, the relevant conclusions are lack of systemic and consistency.So the first task is summed up and summarized the experience of forefathers’ research, provide reference for the research of this paper. Finally is introducing the related theory to provide theoretical support for this article, advance the research hypothesis, and carries on the verification.The overall framework of this article include six chapters.The first part talks about the research background and significance of this article, the research framework and ideas of this article, t the research methods and main content of this article, the new ideas of the paper.The second chapter is literature review, were introduced from abroad and domestic two aspects were introduced to show about the related research status quo of institutional investors getting involved in the activities of companies governance and influencing compensation performance sensitivity. Combed and summarized on the above work, extract the meaningful research for this article research.The third chapter introduces the related theoretical basis, analyzes its mechanism of action, provides support for the research of this paper.The fourth chapter is mainly based on the above theoretical analysis and literature summary, put forward the research hypothesis, determine the scope of the sample, select variables according to the need, construct the corresponding regression models.The fifth chapter content mainly includes descriptive statistics, sample regression, the corresponding analysis and the robustness test. Sixth chapter is about the summary of the essay, the research results are summarized, corresponding policy Suggestions are put forward, the shortages of this study and follow-up research directions are points out.Based on the basis of related papers about the analysis of institutional investors and the compensation performance sensitivity, we put forward the corresponding research hypothesis and construct the corresponding model. Choose the2007-2012Shanghai A-share manufacturing listed companies in our country,1002samples are converted to the corresponding panel data for describing and regression analysis, from the perspective of institutional investors supervision strength, the empirical study of the effect of institutional holdings influence on the compensation performance sensitivity, finally got the following conclusions:First, the relationship between the depth of the institutional investors holding listed companies and pay performance sensitivity is positive related. Institutional investors in our country gradually developed, also became more and more important in the corporate governance. We can see, the degree of institutional investors involved in the management of listed companies is deeper and larger stake. Compare with individual investors, institutional investors have the advantages of funds, information and professional ability, etc, they can be more rational on investment decisions, also can more effectively play a role of supervision, improve the level of governance of listed companies and the compensation performance sensitivity.Second, the effect of institutional holdings breadth influence on the compensation performance sensitivity of listed companies is positive. According to the data analysis of this article, institutional investors own around six seats on average in the top ten shareholders of listed companies, This means that institutional investors can get representatives in the listed company, get more close to the board of directors of the company to play a role in the company’s management. So, the institutional investors hold breadth will improve the lever of compensation performance sensitivity.Third, the effect which institutional investors turnover rate affect on the compensation performance sensitivity is negatively related. Higher turnover rate means that institutional investors tend to short-term ownership, the value of pursuit of short-term performance and the immediate interests often leads to its idle to participate in corporate governance. When the investment company performance is not good, they will not be positive or effective on intervention and guidance, but insist on a "vote with their feet" patterns of behavior to get out from more damage, this will lead to the decline of compensation performance sensitivity; On the other hand, the lower turnover rate means that the institutional investor will take actively participate in long-term governance of listed companies, compare with the institutional investors pay attention to short-term interests, they prefer to share the company’s surging share long-term gains by improving the governance of listed companies.Fourth, in the same condition, the relationship between the depth and breadth of the institutional investors in private listed companies holding and compensation performance sensitivity is positive, the negative influence of institutional investors shareholding value tendency (turnover rate) on compensation performance sensitivity of state-owned listed companies is more significant.In conclusion, with the power of institutional investors becoming stronger and stronger in our country, it gives us more hopes to improve the corporate governance.In this paper, we have the new ideas as follow:Key points in the present study is to analyze the influence of institutional investors equity concentration and heterogeneity on compensation performance sensitivity, measurement of the impact of institutional investors are mostly limited to the institutional investors holding, the research about the relationship between the characteristics of institutional investors and the compensation performance sensitivity is less, so, this paper constructs the institutional investors holding characteristics, including holding depth, breadth and value tendency, do more work from more aspects to rich the present research. |
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